F&O view: Options data shows Rexit or Brexit, Nifty may not slip below 8,000

NEW DELHI: The Nifty50 turned volatile on Monday, slipping below the 8,150 mark at one point after Reserve Bank of India (RBI) governor Raghuram Rajan said he would not be keen on a second term and would return to academia.

A kneejerk reaction to the development took the Nifty50 below the 8,150 level in morning trade on Monday, though it recovered soon after and was trading above it.
Options data showed fresh Put writing at lower levels of 8,000 and 7,900, which should now lend support to the index.

At last count, there were 4.19 lakh contracts at strike price 8,000, 2.65 lakh at strike price 7,900 strike and 3.17 lakh at strike price 8,200.

Total Put open interest of 78.95 lakh contracts still stood at strike price 8,000, which will act as a strong base for Nifty, followed by strike price 8,100, which has some 46.31 lakh contracts in open interest, and strike price 7,900, which has 39.14 lakh contracts.

“On the options front, maximum Put OI is at strike price 8,000 followed by 8,100 while maximum Call OI is at strike price 8,300 followed by 8,400. We have seen fresh Put writing at strike prices 8,000 and 8,200 while fresh Call writing at strike price 8,300 will keep the upside limited,” Chandan Taparia, Derivatives Analyst - Equity Research, Anand Rathi Financial Services, told ETMarkets.com.

“The Put-Call ratio is holding above the 1.10 level, which indicates that Put writers are more comfortable than the Call writers, which means the medium-term trend remains positive,” he said.



Fresh Call writing was seen at strike price 8,300 (3.95 lakh contracts added) while some unwinding was seen at strike price 8,100 (2.38 lakh contracts shed).

Total Call open interest of 65.20 lakh contracts still stood at strike price 8,300, which will act as a ceiling for the market, followed by strike price 8,400 which has accumulated 47.95 lakh contracts in open interest, while strike price 8,500 had 47.66 lakh contracts in open interest.

Foreign institutional investors (FIIs) were marginal buyers in equity cash segment on Friday. In index futures, they sold positions worth Rs 480 crore with a minor change in open interest, indicating a blend of both long unwinding and short build-up in last trading session.

On the index options front, FIIs sold positions worth Rs 656 crore with a rise in open interest, which indicated long unwinding. In Call options, strike price 8,300 saw addition of fresh positions, followed by a marginal fall in OI at strike price 8,100.

“The Nifty50 may remain in the 8,000-8,300 range. One should remain light on positions and wait for further development on the data front,” Angel Broking said in a report.